8-K/A

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 8-K/A

Current Report
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934

September 19, 2003

Date of Report (Date of earliest event reported)

PORTOLA PACKAGING, INC.

(Exact name of registrant as specified in its charter)

Delaware	033-95318	94-1582719
(State or Other Jurisdiction of Incorporation)	(Commission File Number)	(IRS Employer Identification No.),

890 Faulstich Court
San Jose, CA 95112

(Address of principal executive offices, including zip code)

(408) 453-8840

(Registrant’s telephone number, including area code)

Registrant is not required to file, and is not filing, this Report on Form 8-K/A pursuant to Section 13 or 15(d) of the Securities and Exchange Act of 1934. Registrant is filing this Report on Form 8-K/A solely to fulfill its obligations under its senior notes of 8 1/4% due on February 1, 2012.

Item 2. Acquisition or Disposition of Assets

     This amendment on Form 8-K/A is being filed to amend the Form 8-K filed with the Commission on October 6, 2003 and the Form 8-K/A filed with the Commission on December 4, 2003 by Portola Packaging, Inc. (“Portola”), a Delaware corporation, to restate the financial statements and pro forma financial information referred to in Item 7 of this Form 8-K/A, relating to the acquisition of all of the issued and outstanding capital stock of Tech Industries, Inc. and Tech Industries U.K. Ltd., an affiliate, both Rhode Island corporations (collectively “Tech”). Portola also acquired certain land, buildings and fixtures used by Tech in its manufacturing operations and held by Fairmount Realty Associates and 84 Fairmount Street Limited Partnership, affiliates of Tech, that were transferred to Tech Industries, Inc. immediately prior to the closing. The acquisition closed on September 19, 2003. Except as set forth in Item 7 below, no other changes have been or are being made to the disclosures already included in the report of Portola on Form 8-K filed with the Commission on October 6, 2003.

Item 7. Financial Statements and Exhibits

     (a)  Financial statements of businesses acquired.

          Attached as Exhibits 99.1 and 99.2 are the following items:

i)

The audited combined balance sheets of Tech Industries, Inc. and Affiliates as of December 29, 2002 (as restated) and December 30, 2001, and the related combined statements of income (loss), equity and cash flows for the years ended December 29, 2002 (as restated), December 30, 2001 and December 31, 2000, and Report of Independent Auditors of Prescott Chatellier Fontaine & Wilkinson, LLP with respect thereto.

ii)

The unaudited condensed combined balance sheet as of June 30, 2003 (as restated) and the unaudited condensed combined statements of income and cash flows of Tech Industries, Inc. and Affiliates for the six-month periods ended June 30, 2003 (as restated) and June 30, 2002 (as restated).

     (b)  Pro Forma financial information.

          Attached as Exhibit 99.3 are the following items:

i)	Unaudited Pro Forma Condensed Consolidated Statements of Operations for the years ended August 31, 2003 and August 31, 2002 (as restated).
ii)	Unaudited Pro Forma Condensed Consolidated Statements of Operations for the three-month periods ended November 30, 2003 and 2002.
iii)	Notes to Unaudited Pro Forma Condensed Consolidated Statement of Operations (as restated).

2

     (c)  Exhibits.

2.01	Stock Purchase Agreement, dated as of September 1, 2003, by and among the Registrant, Tech Industries, Inc. and the shareholders of Tech Industries, Inc. incorporated herein by reference to exhibit 2.01 to Portola’s report on Form 8-K as filed with the Commission on October 6, 2003.
2.02	Stock Purchase Agreement, dated as of September 1, 2003, by and among the Registrant, Tech Industries U.K. Ltd. and the shareholders of Tech Industries U.K. Ltd. incorporated herein by reference to exhibit 2.02 to Portola’s report on Form 8-K as filed with the Commission on October 6, 2003.
2.03	Equity Purchase Agreement, dated as of September 1, 2003, by and among the Registrant and the partners of Fairmount Realty Associates incorporated herein by reference to exhibit 2.03 to Portola’s report on Form 8-K as filed with the Commission on October 6, 2003.
2.04	Equity Purchase Agreement, dated as of September 1, 2003, by and among the Registrant and the partners of 84 Fairmount Street Limited Partnership incorporated herein by reference to exhibit 2.04 to Portola’s report on Form 8-K as filed with the Commission on October 6, 2003.
2.05	Closing Agreement, dated as of September 19, 2003, by and among the Registrant, the shareholders of Tech Industries, Inc., the shareholders of Tech Industries U.K. Ltd. and the partners of Fairmount Realty Associates and 84 Fairmount Street Limited Partnership incorporated herein by reference to exhibit 2.05 to Portola’s report on Form 8-K as filed with the Commission on October 6, 2003.
10.1	Consent and First Amendment to Third Amended and Restated Credit Agreement dated as of September 19, 2003 by and among Portola Packaging, Inc., as Borrower and Heller Financial, Inc. as Agent and Lender incorporated herein by reference to exhibit 10.1 to Portola’s report on Form 8-K as filed with the Commission on October 6, 2003.
23.01	Consent of Independent Accountants.
99.1	The audited combined balance sheets of Tech Industries, Inc. and Affiliates as of December 29, 2002 (as restated) and December 30, 2001, and the related combined statements of income (loss), equity and cash flows for the years ended December 29, 2002 (as restated), December 30, 2001 and December 31, 2000, and Report of Independent Auditors of Prescott Chatellier Fontaine & Wilkinson, LLP with respect thereto. (filed herewith)
99.2	The unaudited condensed combined balance sheet as of June 30, 2003 (as restated) and the unaudited condensed combined statements of income and cash flows of Tech Industries, Inc. and Affiliates for the six-month periods ended June 30, 2003 (as restated) and June 30, 2002 (as restated). (filed herewith)
99.3	Unaudited pro forma condensed consolidated statements of operations (as restated). (filed herewith)

3

SIGNATURE

     Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

	Portola Packaging, Inc. a Delaware corporation
Date: February 9, 2004	By:	/s/ Dennis L. Berg
		Dennis L. Berg, Vice President and
		Chief Financial Officer

4

INDEX TO EXHIBITS

2.01	Stock Purchase Agreement, dated as of September 1, 2003, by and among the Registrant, Tech Industries, Inc. and the shareholders of Tech Industries, Inc. incorporated herein by reference to exhibit 2.01 to Portola’s report on Form 8-K as filed with the Commission on October 6, 2003.
2.02	Stock Purchase Agreement, dated as of September 1, 2003, by and among the Registrant, Tech Industries U.K. Ltd. and the shareholders of Tech Industries U.K. Ltd. incorporated herein by reference to exhibit 2.02 to Portola’s report on Form 8-K as filed with the Commission on October 6, 2003.
2.03	Equity Purchase Agreement, dated as of September 1, 2003, by and among the Registrant and the partners of Fairmount Realty Associates incorporated herein by reference to exhibit 2.03 to Portola’s report on Form 8-K as filed with the Commission on October 6, 2003.
2.04	Equity Purchase Agreement, dated as of September 1, 2003, by and among the Registrant and the partners of 84 Fairmount Street Limited Partnership incorporated herein by reference to exhibit 2.04 to Portola’s report on Form 8-K as filed with the Commission on October 6, 2003.
2.05	Closing Agreement, dated as of September 19, 2003, by and among the Registrant, the shareholders of Tech Industries, Inc., the shareholders of Tech Industries U.K. Ltd. and the partners of Fairmount Realty Associates and 84 Fairmount Street Limited Partnership incorporated herein by reference to exhibit 2.05 to Portola’s report on Form 8-K as filed with the Commission on October 6, 2003.
10.1	Consent and First Amendment to Third Amended and Restated Credit Agreement dated as of September 19, 2003 by and among Portola Packaging, Inc., as Borrower and Heller Financial, Inc. as Agent and Lender incorporated herein by reference to exhibit 10.1 to Portola’s report on Form 8-K as filed with the Commission on October 6, 2003.
23.01	Consent of Independent Accountants.
99.1	The audited combined balance sheets of Tech Industries, Inc. and Affiliates as of December 29, 2002 (as restated) and December 30, 2001, and the related combined statements of income (loss), equity and cash flows for the years ended December 29, 2002 (as restated), December 30, 2001 and December 31, 2000, and Report of Independent Auditors of Prescott Chatellier Fontaine & Wilkinson, LLP with respect thereto. (filed herewith)
99.2	The unaudited condensed combined balance sheet as of June 30, 2003 (as restated) and the unaudited condensed combined statements of income and cash flows of Tech Industries, Inc. and Affiliates for the six-month periods ended June 30, 2003 (as restated) and June 30, 2002 (as restated). (filed herewith)
99.3	Unaudited pro forma condensed consolidated statements of operations (as restated). (filed herewith)

5 EX-23.1 3 j0551501exv23w1.htm EXHIBIT 23.1

Exhibit 23.01

TECH INDUSTRIES, INC. AND AFFILIATES

CONSENT OF INDEPENDENT ACCOUNTANTS

We hereby consent to the incorporation by reference in the Registration Statements on Form S-8 (No’s. 333-82125 and 333-17533) of Portola Packaging, Inc., of our report dated December 29, 2003, relating to the restated financial statements of Tech Industries, Inc. and Affiliates, which appears in this Form 8-K/A of Portola Packaging, Inc. dated February 9, 2004.

/s/ Prescott Chatellier Fontaine & Wilkinson, LLP

Prescott Chatellier Fontaine & Wilkinson, LLP
Providence, Rhode Island

February 9, 2004

6 EX-99.1 4 j0551501exv99w1.htm EXHIBIT 99.1

Exhibit 99.1

TECH INDUSTRIES, INC. AND AFFILIATES

COMBINED FINANCIAL STATEMENTS

As of December 29, 2002 (as restated) and December 30, 2001
For the Years Ended December 29, 2002 (as restated), December 30, 2001 and December 31, 2000
With Report of Independent Auditors’

7

REPORT OF INDEPENDENT AUDITORS’

To the Stockholders and Partners of
Tech Industries, Inc. and Affiliates

     We have audited the accompanying combined balance sheets of Tech Industries, Inc. and Affiliates as of December 29, 2002 and December 30, 2001 and the related statements of income (loss), equity and cash flows for the years ended December 29, 2002, December 30, 2001 and December 31, 2000. These combined financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these combined financial statements based on our audits.

     We conducted our audits in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the combined financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

     In our opinion, the combined financial statements referred to above present fairly, in all material respects, the financial position of Tech Industries, Inc. and Affiliates as of December 29, 2002 and December 30, 2001 and the results of their operations and their cash flows for the years ended December 29, 2002, December 30, 2001 and December 31, 2000 in conformity with accounting principles generally accepted in the United States of America.

/s/ Prescott Chatellier Fontaine & Wilkinson, LLP

Prescott Chatellier Fontaine & Wilkinson, LLP
Providence, Rhode Island

December 29, 2003

8

TECH INDUSTRIES, INC. AND AFFILIATES

COMBINED BALANCE SHEETS
(in thousands)

				December 29,		December 30,
				2002		2001
				(as restated)
			ASSETS
Current assets:
	Cash and cash equivalents			$	5,447	$	1,467
	Accounts receivable, less allowance of $212				3,761		5,232
	Inventories				3,268		4,120
	Other current assets				199		195
	Property held for sale				726		211
		Total current assets			13,401		11,225
Property and equipment, net					6,024		6,909
Property held for sale					—		726
Other assets					4		4
		Total assets		$	19,429	$	18,864
			LIABILITIES, MINORITY INTEREST AND EQUITY
Current liabilities:
	Accounts payable			$	934	$	1,496
	Accrued expenses and liabilities				1,578		1,399
		Total current liabilities			2,512		2,895
Minority interest					408		—
Equity:
	Common stock				21		21
	Paid-in capital				2,815		2,794
	Partners’ capital				1,617		1,385
	Retained earnings				12,056		11,769
		Total equity			16,509		15,969
			Total liabilities, minority interest and equity	$	19,429	$	18,864

The accompanying notes are an integral part of these combined financial statements.

9

TECH INDUSTRIES, INC. AND AFFILIATES

COMBINED STATEMENTS OF INCOME (LOSS)
(in thousands)

			Year ended			Year ended			Year ended
			December 29,			December 30,			December 31,
			2002			2001			2000
			(as restated)
Sales			$	31,670		$	37,144		$	39,203
Cost of sales				24,161			30,330			32,519
	Gross profit			7,509			6,814			6,684
Selling, general and administrative				3,872			4,723			5,471
Research and development				412			—			—
Restructuring costs				—			39			1,908
	Income (loss) from operations			3,225			2,052			(695	)
Other (income) expense:
	Interest income			(56	)		(61	)		(21	)
	Interest expense			—			300			111
	(Gain) loss on sale of fixed asset			(626	)		172			400
	Foreign currency exchange (gain) loss			(175	)		2,609			23
	Minority interest expense			148			—			—
	Other, net			(363	)		(136	)		(90	)
		Total other (income) expense		(1,072	)		2,884			423
Net income (loss)			$	4,297		$	(832	)	$	(1,118	)

The accompanying notes are an integral part of these combined financial statements.

10

TECH INDUSTRIES, INC. AND AFFILIATES

COMBINED STATEMENTS OF EQUITY

For the Years Ended

December 29, 2002, December 30, 2001 and December 31, 2000
(in thousands)

											Accumulated
											Other
	Common		Paid-in		Partner’s			Retained			Comprehensive			Total
	Stock		Capital		Capital			Earnings			Income (Loss)			Equity
Balance, December 26, 1999	$	21	$	2,607	$	642		$	18,061		$	(1,517	)	$	19,814
Foreign currency translation adjustment												(560	)		(560	)
Net income (loss) for the year						655			(1,773	)					(1,118	)
Comprehensive loss															(1,678	)
Capital contribution				37											37
Distribution to stockholders						(222	)		(957	)					(1,179	)
Balance, December 31, 2000		21		2,644		1,075			15,331			(2,077	)		16,994
Foreign currency translation adjustment (Note 6)												2,077			2,077
Net income (loss) for the year						680			(1,512	)					(832	)
Comprehensive income															1,245
Capital contribution				150											150
Distribution to stockholders						(370	)		(2,050	)					(2,420	)
Balance, December 30, 2001		21		2,794		1,385			11,769			—			15,969
Net income for the year, as restated						710			3,587						4,297
Comprehensive income, as restated															4,297
Capital contribution				21											21
Distribution to stockholders						(478	)		(3,300	)					(3,778	)
Balance, December 29, 2002, as restated	$	21	$	2,815	$	1,617		$	12,056		$	—		$	16,509

The accompanying notes are an integral part of these combined financial statements.

11

TECH INDUSTRIES, INC. AND AFFILIATES

COMBINED STATEMENTS OF CASH FLOWS
(in thousands)

					Year ended			Year ended			Year ended
					December 29,			December 30,			December 31,
					2002			2001			2000
					(as restated)
Cash flows from operating activities:
	Net income (loss)				$	4,297		$	(832	)	$	(1,118	)
	Adjustments to reconcile net income (loss) to net cash provided by operating activities:
		Depreciation and amortization				1,657			1,799			2,153
		Decrease in provision for doubtful accounts				—			(89	)		(17	)
		Minority interest expense				148			—			—
		Reclassification of currency loss (Note 6)				—			2,529			—
		(Gain) loss on sale of property and equipment				(626	)		172			400
		Gain on sale of stock of subsidiary				(17	)		—			—
		(Increase) decrease in:
			Accounts receivable			1,310			1,018			1,551
			Inventories			851			2,353			(210	)
			Other assets			(82	)		385			654
		Increase (decrease) in:
			Accounts payable			(530	)		(732	)		(704	)
			Accrued expenses and liabilities			130			(827	)		(44	)
				Net cash provided by operating activities		7,138			5,776			2,665
Cash flows from investing activities:
		Proceeds from sale of property and equipment				1,405			336			1,240
		Principal collected on notes receivable				74			84			34
		Capital expenditures				(1,160	)		(1,103	)		(3,971	)
		Decrease (increase) in cash surrender value of life insurance				—			554			(33	)
		Proceeds from sale of stock				363			—			—
				Net cash provided by (used in) investing activities		682			(129	)		(2,730	)
Cash flows from financing activities:
		Decrease in book overdraft				—			—			(245	)
		Payments on long-term debt				(4	)		(2,131	)		1,637
		Distributions to stockholders/partners				(3,778	)		(2,420	)		(1,179	)
		Capital contribution				21			150			37
				Net cash (used in) provided by financing activities		(3,761	)		(4,401	)		250
Effect of exchange rate changes on cash						(79	)		(20	)		56
		Increase in cash and cash equivalents				3,980			1,226			241
Cash and cash equivalents at beginning of period						1,467			241			—
Cash and cash equivalents at end of period					$	5,447		$	1,467		$	241

The accompanying notes are an integral part of these combined financial statements.

12

TECH INDUSTRIES, INC. AND AFFILIATES

NOTES TO COMBINED FINANCIAL STATEMENTS

1.     Summary Of Significant Accounting Policies

Basis of Presentation

     The combined financial statements include the accounts of Tech Industries, Inc. (“Tech”) and its subsidiaries and affiliated entities Fairmount Realty Associates, 84 Fairmount Street Limited Partnership and Tech Industries U.K. Ltd. (collectively, the “Company”). The affiliated entities are included since the entities have common ownership with Tech. These affiliated entities are collectively referred to as the “Affiliates”.

     The accompanying combined financial statements as of and for the year ended December 29, 2002 have been restated to reflect a change in the recognition of revenues for sales to one customer. The Company previously recognized revenue for goods sold to the customer upon shipment to the customer’s warehouse, where they are held under a consignment arrangement initiated in 2002. Management determined that revenue from such shipments should have been recognized upon consumption of the Company’s product by the customer. The restatement decreased net income for the year ended December 29, 2002 by approximately $100,000. The table below summarizes the impact on the combined balance sheet and combined statement of operations (in thousands):

		As Previously
		Reported		As Restated
At December 29, 2002:
	Accounts Receivable	$	4,241	$	3,761
	Inventory	$	2,805	$	3,268
	Retained earnings	$	12,156	$	12,056
For the year ended December 29, 2002:
	Sales	$	32,234	$	31,670
	Cost of sales	$	24,625	$	24,161
	Gross profit	$	7,609	$	7,509
	Income from operations	$	3,325	$	3,225
	Net income	$	4,397	$	4,297

Organization and Nature of Business

     Tech manufactures and sells plastic packaging components from a manufacturing facility located in Woonsocket, Rhode Island.

     The Company had two foreign subsidiaries, Tech Industries Ireland Limited (“Tech Ireland”) and Tech Industries do Brasil Ltda., which ceased operations in 2001. During 2002, the Company sold a 22.86% interest in Tech Ireland for $363,000 to an officer of the Company. A gain of $17,020 was realized from the sale.

13

TECH INDUSTRIES, INC. AND AFFILIATES

NOTES TO COMBINED FINANCIAL STATEMENTS

1.     Summary Of Significant Accounting Policies (Continued)

     Tech Industries U.K. Ltd. (“Tech U.K.”) operates as a sales office in the United Kingdom for products sold to customers in Europe. During 2002, the Company transferred approximately $1.7 million of its European sales to Tech U.K., which subcontracted the production to another manufacturer. The Company also transferred approximately $1.8 million in European sales to another manufacturer and earned an 8 percent commission totaling $144,482 on such sales.

     Fairmount Realty Associates owns the manufacturing facility used by Tech and 84 Fairmount Street Limited Partnership owns a warehouse used by Tech.

     Substantially all of the trade accounts receivable are due from companies in the cosmetic industry throughout the world. The Company performs credit evaluations on all new customers and does not require collateral. Credit losses are provided for in the financial statements and consistently have been within management’s expectations.

Principles of Consolidation

     The combined financial statements of the Company include the financial statements of Tech and its subsidiaries that are controlled by the Company and entities that have common ownership with Tech. All material intercompany accounts and transactions between the combined entities have been eliminated.

Fiscal Year End

     The Company’s fiscal year ends on the last Sunday in December.

Cash Equivalents

     The Company considers all highly liquid and short-term investments with an original maturity of three months or less to be cash equivalents.

Inventories

     Inventories are stated at the lower of first-in, first-out (FIFO) cost or market.

14

TECH INDUSTRIES, INC. AND AFFILIATES

NOTES TO COMBINED FINANCIAL STATEMENTS

1.     Summary Of Significant Accounting Policies (Continued)

Property and Equipment

     Property and equipment are recorded at cost, except that property under capital leases is recorded at the lower of the present value of future minimum lease payments or the fair value of the property at the beginning of the lease term. The cost and accumulated depreciation of assets sold or retired are removed from the respective accounts and any gain or loss is recorded in earnings. Maintenance and repairs are charged to expense when incurred. Depreciation is provided over the estimated useful lives of the assets using the straight-line method as follows:

Assets	Life
Buildings/Leasehold improvements	5 - 39 years
Machinery and equipment	3 - 7 years
Molds	3 - 7 years
Furniture and fixtures	7 years
Transportation equipment	5 years
Computer equipment	5 years

Property Held for Sale

     At December 29, 2002 and December 30, 2001, the property held for sale totaled $726,000 and $937,000, respectively, and are classified in the accompanying combined balance sheets as current and noncurrent assets based on the year of sale. Refer to Note 6.

Income Taxes

     Tech and Tech U.K. are S Corporations as defined in the Internal Revenue Code. Accordingly, the Company does not provide for income taxes since the pro rata share of income is included in the stockholders’ individual tax returns.

     84 Fairmount Street Limited Partnership and Fairmount Realty Associates are partnerships. Accordingly, the pro rata share of income is included in the partners’ individual income tax returns.

Concentration of Credit Risk

     The Company has cash deposits at one financial institution, which has a federally insured limit of $100,000. The cash balance in this institution exceeds the federally insured limit at various times throughout the year.

15

TECH INDUSTRIES, INC. AND AFFILIATES

NOTES TO COMBINED FINANCIAL STATEMENTS

1.     Summary of Significant Accounting Policies (continued)

Translation of Foreign Currencies

     The Company’s foreign subsidiaries use the local currency as their functional currency. Assets and liabilities are translated at year-end exchange rates. Items of income and expense are translated at average exchange rates for the relevant year. Translation gains and losses are not included in determining net income (loss) but are accumulated as a separate component of equity. Gains and losses arising from foreign currency transactions are included in determining net income (loss).

Revenue Recognition

     The Company recognizes revenue when title, ownership and risk of loss pass to the customer and collectibility is probable. For one customer, revenue is recognized when the Company’s consigned inventory is consumed by the customer.

Advertising Expenses

     Advertising costs are expensed as incurred and totaled $168,118, $211,442, and $309,094 for the years ended December 29, 2002, December 30, 2001 and December 31, 2000, respectively.

Research and Development Expenditures

     Research and development expenditures are charged to operations as incurred.

Segment Information

     The Company follows the provisions of SFAS No. 131, “Disclosures about Segments of an Enterprise and Related Information, Financial Reporting for Segments of a Business.” This statement establishes standards for reporting information about operating segments, products and services, geographic areas and major customers in annual financial statements. The Company manages and operates its business as one segment. International sales were 21% of revenues in 2002, 22% in 2001 and 32% in 2000.

Use of Estimates

     The preparation of the combined financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

16

TECH INDUSTRIES, INC. AND AFFILIATES

NOTES TO COMBINED FINANCIAL STATEMENTS

1. Summary of Significant Accounting Policies (continued)

Reclassifications

     Certain reclassifications have been made to prior year amounts to conform with the current year presentation. These reclassifications had no effect on reported net earnings.

Recent Accounting Pronouncements

     In July 2001, the Financial Accounting Standards Board (FASB) issued Statement of Financial Accounting Standards (SFAS) No. 141, “Business Combinations” and SFAS No. 142, “Goodwill and Other Intangible Assets.” SFAS No. 141 established accounting and reporting standards for business combinations. SFAS No. 142 established accounting and reporting standards for acquired goodwill and other intangible assets, specifically, how they should be treated upon, and subsequent to, their acquisition. Both SFAS No. 141 and SFAS No. 142 are required to be applied in fiscal years beginning after December 15, 2001. Effective December 30, 2002, the Company adopted Statement of Financial Accounting Standards (“SFAS”) No. 142, “Goodwill and Other Intangible Assets,” and (SFAS) No. 141, “Business Combinations”. The adoption of SFAS No. 141 and 142 had no impact on the Company’s financial statements for the year ended December 29, 2002.

     On August 15, 2001, the FASB issued SFAS No. 143, “Accounting for Asset Retirement Obligation.” The Company will adopt this statement on December 29, 2003 and is presently evaluating the impact it may have on the Company.

     On August 15, 2001, FASB issued SFAS No.144, “Accounting for the Impairment or Disposal of Long-Lived Assets.” SFAS No. 144 supercedes or amends existing accounting literature related to the impairment and disposal of long-lived assets. SFAS No. 144 requires long-lived assets to be tested for impairment whenever events or changes in circumstances indicate that their carrying amount may not be recoverable from future cash flows of the particular asset group or there is an expectation that it is more likely than not that a long-lived group will be sold or otherwise disposed of before the end of its previously estimated useful life. The adoption of SFAS No. 144 had no impact on the Company’s financial statements for the year ended December 29, 2002.

     Effective January 1, 2002, the Company adopted SFAS No. 145, “Rescission of Financial Accounting Standards Board’s (“FASB”) Statements No. 4, 44, and 64, Amendment of FASB Statement No. 13, and Technical Corrections.” This statement updates, clarifies and simplifies existing accounting pronouncements. While the technical corrections to existing pronouncements are not substantive in nature, in some instances they may change accounting practice. The provisions of this standard related to SFAS No. 13, Accounting for Leases, are effective for transactions occurring after May 15, 2002. Prospectively, as a result of the adoption of SFAS No. 145, debt extinguishment costs will no longer be treated as extraordinary items. The impact of adopting SFAS No. 145 was not material to the Company’s financial statements for the year ended December 29, 2002.

17

TECH INDUSTRIES, INC. AND AFFILIATES

NOTES TO COMBINED FINANCIAL STATEMENTS

2. Inventories

     Inventories at December 29, 2002 and December 30, 2001 consisted of the following (in thousands):

	2002			2001
	(as restated)
Raw materials		$	868	$	1,090
Work in process and finished goods			2,400		3,030
Total		$	3,268	$	4,120

3. Property and Equipment

     Property and equipment and accumulated depreciation at December 29, 2002 and December 30, 2001 consisted of the following (in thousands):

		2002			2001
Land		$	404		$	404
Buildings			1,424			1,424
Machinery and equipment			15,463			15,498
Molds			6,879			6,255
Transportation equipment			119			185
Furniture and fixtures			314			313
Leasehold improvements			457			457
Computer equipment			1,129			1,044
	Total property and equipment	$	26,189		$	25,580
	Total accumulated depreciation		(20,165	)		(18,671	)
	Net property and equipment	$	6,024		$	6,909

4. Revolving Credit Agreement

     At December 29, 2002, the Company had a Revolving Credit Agreement (the “Agreement”) with Citizens Bank, which provided for maximum borrowings of up to $4,000,000 through June 30, 2004. The Company could borrow at the Bank’s Prime lending rate (4.25% at December 29, 2002 and 4.75% at December 30, 2001) or at Libor + 135 basis points (2.79% at December 29, 2002 and 3.8% at December 30, 2001). The maximum borrowings under the Agreement were reduced by standby letter of credit (Refer to Note 8). Borrowings under the Agreement were unsecured. The loan agreement contained certain restrictive covenants, the most restrictive of which required minimum tangible net worth and cash flow to debt service ratios. It also limited additional borrowings and investments. Payments of interest only were due until the agreement expired on June 30, 2004. As of December 29, 2002 and December 30, 2001, there were no outstanding borrowings under the revolving line of credit. In connection with the sale of the Company as discussed in Note 11, the Agreement was terminated.

18

TECH INDUSTRIES, INC. AND AFFILIATES

NOTES TO COMBINED FINANCIAL STATEMENTS

5. Common Stock

     Common stock issued and authorized as of December 29, 2002, December 30, 2001, and December 31, 2000 is as follows:

     Tech Industries, Inc. – Common stock, no par value, authorized 8,392 shares, issued and outstanding 7,840 shares.

     Tech Industries U.K. Ltd. – Common stock, no par value, authorized 4,000 shares, issued and outstanding 200 shares.

6. Restructuring

     In December 2000, the Company announced a restructuring plan involving the closing of its Ireland operation. The Company recorded restructuring charges during fiscal year 2000 totaling approximately $1,908,000, which consisted principally of employee severance costs. The Ireland facilities ran a minimal operation through April 2001 when it ceased operations completely and placed the facilities for sale. On December 18, 2002, the Company sold two buildings for $1,058,525 and the remaining two buildings on July 31, 2003 for $1,120,529. The proceeds on such transactions were used to liquidate the Company’s investment in Tech Ireland, which was distributed to the shareholders of the Company in August 2003.

     In October 2001, the Company announced a restructuring plan involving the closing of its Brazil operation. The decision to cease operation was made due to the heavy competition and a poor economy in Brazil. All of the useful fixed assets, with a net book value of approximately $994,000, were transferred back to the Company and placed into operation during December 2001. As a result of ceasing operations in Brazil and Ireland, the Company charged $2,529,000 to operations during the year ended December 30, 2001, which had previously been included in other comprehensive income (loss).

7. Retirement Plans

     The Company maintains a 401(k) and a discretionary profit sharing plan. Annual Company contributions, as determined by the officers of the Company, are made to a trust fund. Contributions to the Plan were $266,000, $311,000 and $306,000 for years ended December 29, 2002, December 30, 2001, and December 31, 2000, respectively.

19

TECH INDUSTRIES, INC. AND AFFILIATES

NOTES TO COMBINED FINANCIAL STATEMENTS

8. Self-Insurance Plan

Workers’ Compensation

     The Company was self-insured for Workers’ Compensation from 1991 through 1996. In connection with the self-insurance program, the Company was required to maintain a $250,000 standby letter of credit, which was renewed on May 1, 2003. The letter of credit provided the collateral necessary for the State of Rhode Island until the State was satisfied that all claims have been paid. There was one workers’ compensation case pending. Subsequent to December 29, 2002, the Company lost its’ appeal on the case and had to pay $80,269 plus legal fees of $16,500, which was accrued for at December 29, 2002. The employee returned to work during October 2003. Additionally, the Company purchased insurance known as “tail coverage” during August 2003 and is now fully insured for all prior periods that the Company had been self-insured. The State of Rhode Island released the letter of credit as collateral and the Company cancelled the standby letter of credit.

Dental Insurance

     The Company has a self-insurance program to provide dental benefits to its employees. The benefits are administered by Delta Dental of Rhode Island and are in accordance with a standard plan thus providing limited benefits.

Officer’s Life Insurance

     In 2001 the Company surrendered the life insurance policy and distributed the proceeds of approximately $550,000 to the shareholders.

9. Deferred Compensation

     On November 26, 2001, the Company entered into deferred compensation agreements with the two officers of the Company. The agreements allowed the officers to earn $5,000 per month for each complete month of service performed. The maximum amount of deferred compensation that could be accrued under this agreement was $350,000 for each officer, thus $700,000 was the cumulative maximum accrual. Total compensation accrued was $120,000 and $10,000 for years ended December 29, 2002 and December 30, 2001, respectively. On September 18, 2003, the Company paid $700,000 pursuant to the terms of the agreement due to the sale of the Company stock to Portola Packaging, Inc., which included the amounts accrued at December 29, 2002 and December 30, 2001.

20

TECH INDUSTRIES, INC. AND AFFILIATES

NOTES TO COMBINED FINANCIAL STATEMENTS

10. Major Customers, Revenue Concentration and Dependence on Certain Suppliers

     The Company manufactures and sells plastic packaging components. The Company had four major customers which accounted for approximately 26%, 22%, 13% and 12% (2002), and two major customers which accounted for approximately 28% and 25% (2001) and 40% and 20% (2000), respectively, of the Company’s sales. Additionally, sales to seven customers represented approximately 83% (2002), 84% (2001), and 72% (2000) of net sales.

     Revenue by geographic location is as follows (in thousands):

	United		United
Year ended:	States		Kingdom		Brazil		Ireland		Total
December 29, 2002, as restated	$	29,946	$	1,725	$	—	$	—	$	31,671
December 30, 2001	$	35,257	$	434	$	758	$	695	$	37,144
December 31, 2000	$	30,982	$	—	$	946	$	7,275	$	39,203

11. Subsequent Events

     In August 2003, Tech Industries, Inc. distributed its stock ownership in Tech Industries Ireland Limited to the shareholders of Tech Industries, Inc.

     On September 19, 2003, all of the outstanding stock of Tech Industries, Inc. and Tech Industries U.K. Ltd. and partnership interests of 84 Fairmount Street Ltd. Partnership and Fairmount Realty Associates were sold to Portola Packaging, Inc. (“Portola”). Portola is a leading diversified packaging business based in San Jose, California. Portola designs, manufactures, and markets a full line of tamper-evident plastic closures primarily for the dairy, fruit juice, and bottled water market segments.

21 EX-99.2 5 j0551501exv99w2.htm EXHIBIT 99.2

Exhibit 99.2

TECH INDUSTRIES, INC. AND AFFILIATES

UNAUDITED CONDENSED COMBINED FINANCIAL STATEMENTS

As of June 30, 2003 (as restated) and
For the Six-Month Periods Ended June 30, 2003 (as restated)
and June 30, 2002 (as restated)

22

TECH INDUSTRIES, INC. AND AFFILIATES

UNAUDITED CONDENSED COMBINED BALANCE SHEET
(in thousands)

				June 30,
				2003
				(as restated)
ASSETS
Current assets:
	Cash and cash equivalents			$	5,167
	Accounts receivable, less allowance of $212				4,437
	Inventories				4,043
	Property held for sale				791
	Other current assets				340
		Total current assets			14,778
Property and equipment, net					5,502
Other assets					4
		Total assets		$	20,284
LIABILITIES, MINORITY INTEREST AND EQUITY
Current liabilities:
	Accounts payable			$	895
	Accrued expenses and liabilities				1,450
		Total current liabilities			2,345
Minority interest					407
Equity:
	Common stock				21
	Paid-in capital				2,820
	Partners’ capital				1,576
	Shareholder loan				(1,080	)
	Retained earnings				14,195
		Total equity			17,532
			Total liabilities, minority interest and equity	$	20,284

The accompanying notes are an integral part of these condensed combined financial statements.

23

TECH INDUSTRIES, INC. AND AFFILIATES

UNAUDITED CONDENSED COMBINED STATEMENTS OF OPERATIONS
(in thousands)

		For the Six-Month Periods
		Ended June 30,
		2003			2002
		(as restated)			(as restated)
Sales		$	17,391		$	15,683
Cost of sales			12,996			11,906
	Gross profit		4,395			3,777
Selling, general and administrative			2,129			1,972
Research and development			—			168
	Income from operations		2,266			1,637
Other (income) expense:
	Interest income		(38	)		(33	)
	Commission income		(147	)		—
	Other, net		(288	)		65
			(473	)		32
	Net income	$	2,739		$	1,605

The accompanying notes are an integral part of these condensed combined financial statements.

24

TECH INDUSTRIES, INC. AND AFFILIATES

UNAUDITED CONDENSED COMBINED STATEMENTS OF CASH FLOWS
(in thousands)

				For the Six-Month Periods
				Ended June 30,
				2003			2002
				(as restated)			(as restated)
Cash flows used in operating activities:
	Net income			$	2,739		$	1,605
	Adjustments to reconcile net income to net cash provided by operating activities
		Depreciation and amortization			817			801
		(Gain) loss on foreign currency			(181	)		258
		Minority interest expense			(1	)		—
	(Increase) decrease in:
		Accounts receivable			(491	)		478
		Inventories			(775	)		701
		Other assets			(88	)		3
	Increase (decrease) in:
		Accounts payable			(28	)		(402	)
		Accrued expenses and liabilities			(376	)		403
			Net cash provided by operating activities		1,616			3,847
Cash flows from investing activities:
	Principal collected on notes receivable				—			12
	Capital expenditures				(229	)		(617	)
			Net cash used in investing activities		(229	)		(605	)
Cash flows from financing activities:
	Payments on long-term debt				—			(136	)
	Increase in shareholder loan				(1,080	)		—
	Capital contributions				4			11
	Distributions to stockholders/partners				(640	)		(3,773	)
			Net cash used by financing activities		(1,716	)		(3,898	)
Effect of exchange rate changes on cash					49			(48	)
	Net decrease in cash and cash equivalents				(280	)		(704	)
Cash and cash equivalents at beginning of period					5,447			1,468
Cash and cash equivalents at end of period				$	5,167		$	764

The accompanying notes are an integral part of these condensed combined financial statements.

25

TECH INDUSTRIES, INC. AND AFFILIATES

NOTES TO UNAUDITED CONDENSED COMBINED FINANCIAL STATEMENTS

1. Basis of Presentation and Restatement:

     The accompanying unaudited condensed combined financial statements include the accounts of Tech Industries, Inc. (“Tech”) and its subsidiaries and affiliated entities Fairmount Realty Associates, 84 Fairmount Street Limited Partnership and Tech Industries U.K. Ltd. (collectively, the “Company”) and have been prepared in accordance with accounting principles generally accepted in the United States of America. The affiliated entities are included since the entities have common ownership with Tech. These affiliated entities are collectively referred to as the “Affiliates”. In the opinion of the Company’s management, the accompanying unaudited condensed combined financial statements contain all adjustments, consisting only of those of a normal, recurring nature necessary for a fair presentation of the results of operations and cash flows of the Company for the periods indicated. While management believes that the disclosures presented are adequate to make the information not misleading, these financial statements should be read in conjunction with the audited combined financial statements of the Company for the year ended December 29, 2002 included elsewhere in this Form 8-K/A. Operating results for the six-month period ended June 29, 2003 are not necessarily indicative of the results that may be expected for the fiscal year ended December 31, 2003.

     The accompanying unaudited condensed combined financial statements as of June 30, 2003 and for the six month periods ended June 30, 203 and 2002 have been restated to reflect a change in the recognition of revenues for sales to one customer. The Company previously recognized revenue for goods sold to the customer upon shipment to the customer’s warehouse, where they are held under a consignment arrangement initiated in 2002. Management determined that revenue from such shipments should have been recognized upon consumption of the Company’s product by the customer. The restatement decreased net income for the six-month periods ended June 30, 2003 and 2002 by approximately $88,000 and $17,000, respectively.

		As Previously		As
		Reported		Restated
At June 30, 2003:
	Accounts Receivable	$	5,285	$	4,437
	Inventories		3,171		4,043
	Retained earnings	$	14,383	$	14,195
For the six month period ended June 30, 2003
	Sales	$	17,889	$	17,391
	Cost of sales		13,405		12,996
	Gross profit		4,484		4,395
	Income from operations		2,355		2,266
	Net loss	$	2,827	$	2,739
For the six month period ended June 30, 2002
	Sales	$	15,777	$	15,683
	Cost of sales		11,983		11,906
	Gross profit		3,794		3,777
	Income from operations		1,654		1,637
	Net loss	$	1,622	$	1,605

26

TECH INDUSTRIES, INC. AND AFFILIATES

NOTES TO UNAUDITED CONDENSED COMBINED FINANCIAL STATEMENTS

2. Subsequent Event:

     In August 2003, Tech Industries, Inc. distributed its stock ownership in Tech Industries Ireland Limited to the shareholders of Tech Industries, Inc.

     On September 19, 2003, all of the outstanding stock of Tech Industries, Inc., Tech Industries U.K. Ltd. and partnership interests of 84 Fairmount Street Ltd. Partnership and Fairmount Realty Associates were sold to Portola Packaging, Inc. “Portola”. Portola is a leading diversified packaging business based in San Jose, California, Portola designs, manufactures, and markets a full line of tamper-evident plastic closures primarily for the dairy, fruit juice, and bottled water market segments.

27 EX-99.3 6 j0551501exv99w3.htm EXHIBIT 99.3

Exhibit 99.3

UNAUDITED PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(1)	Unaudited Pro Forma Condensed Consolidated Statements of Operations for the years ended August 31, 2003 and August 31, 2002 (as restated).
(2)	Unaudited Pro Forma Condensed Consolidated Statements of Operations for the Three-Month Periods Ended November 30, 2003 and 2002.
(3)	Notes to Unaudited Pro Forma Condensed Consolidated Statements of Operations, as restated.

28

PORTOLA PACKAGING, INC. AND SUBSIDIARIES

UNAUDITED PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

     The following unaudited pro forma condensed consolidated financial statements have been prepared to give the effect to the acquisition by Portola Packaging, Inc. (“Portola”) of all of the outstanding stock of Tech Industries, Inc., and its acquisition of Tech Industries U.K. Ltd. and partnership interests of 84 Fairmount Street Ltd. Partnership and Fairmount Realty Associates, affiliated entities, prior to Portola’s acquisition of Tech Industries, Inc. Tech Industries, Inc. and such affiliated entities are referred to collectively as “Tech”. These pro forma financial statements do not purport to be indicative of the consolidated financial position or results of operations for future periods or the results that actually would have been realized had Portola and Tech been a consolidated company during the specified periods.

     The acquisition of Tech was accounted for using the purchase method of accounting pursuant to which the purchase price at closing was allocated to the tangible and intangible assets based on their estimated fair values. The purchase allocations were made based upon preliminary valuations and other studies, which have not yet been finalized. The actual allocation of purchase price may differ significantly from the pro forma amounts included herein.

     The unaudited pro forma condensed consolidated financial statements, including the notes thereto, are qualified in their entirety by reference to, and should be read in conjunction with the historical consolidated financial statements and the notes thereto of Portola which were previously reported in Portola’s Annual Report on Form 10-K for the year ended August 31, 2003 and the Quarterly Report on Form 10-Q for the quarter ended November 30, 2003, and the historical financial statements of Tech for the year ended December 29, 2002 included elsewhere in this Form 8-K/A.

     The unaudited pro forma condensed consolidated statements of operations for the years ended August 31, 2003 and August 31, 2002 (as restated) and the three-month periods ended November 30, 2003 and 2002 were prepared as if the acquisition had occurred on September 1, 2002. To prepare the unaudited pro forma condensed consolidated statements of operations for the years ended August 31, 2003 and 2002, Portola’s statement of operations for the years ended August 31, 2003 and 2002 have been combined with Tech’s unaudited statement of operations for the twelve months ended August 31, 2003 and August 31, 2002 (as restated), respectively, which are not included in this Form 8-K/A. To prepare the unaudited pro forma condensed consolidated statement of operations for the three-month period ended November 30, 2003, Portola’s statement of operations for the three-month period ended November 30, 2003 was combined with Tech’s unaudited statement of operations for the period from September 1, 2003 to September 18, 2003 (the date prior to acquisition). To prepare the unaudited pro forma condensed consolidated statement of operations for the three-month period ended November 30, 2002, Portola’s statement of operations for the three-month period ended November 30, 2002 was combined with Tech’s unaudited statement of operations for the thirteen-week period ended November 24 2002. Tech’s fiscal year and fiscal quarters end on the last Sunday of each calendar quarter. The fifty-two-week period ended August 24, 2003 and the thirteen-week period ended November 24, 2002 are not the usual annual and quarterly period ends for Tech.

29

     As Tech is included on a historical basis in Portola’s November 30, 2003 consolidated balance sheet, a pro forma consolidated balance sheet as of November 30, 2003 was not included herein. The unaudited pro forma condensed consolidated statement of operations for the year ended August 31, 2002 was included herein to restate the unaudited pro forma condensed consolidated statement of operations that had been originally reported in the Form 8-K/A filed on December 4, 2003. The unaudited pro forma condensed consolidated balance sheet as of May 31, 2003 and the unaudited pro forma condensed consolidated statements of operations for the nine-month periods ended May 31, 2003 and 2003 included in the Form 8-K/A of Portola Packaging, Inc. dated December 4, 2003 has not been restated and included herein as the financial information is included in the unaudited pro forma condensed consolidated statements of operations for the twelve-months ended August 31, 2003 and August 31, 2002 (as restated).

30

PORTOLA PACKAGING, INC. AND SUBSIDIARIES

UNAUDITED PRO FORMA CONDENSED CONSOLIDATED

STATEMENT OF OPERATIONS

For the Year Ended August 31, 2003
(in thousands)

									Pro Forma					Portola
			Portola			Tech			Adjustments					Pro Forma
Sales			$	215,315		$	33,934		$	—				$	249,249
Cost of sales				166,689			25,698			981		(1	)		193,368
	Gross profit			48,626			8,236			(981	)				55,881
Selling, general and administrative				29,307			4,047			(75	)	(2	)		33,279
Research and development				4,729			167			—					4,896
Amortization of intangibles				903			—			285		(3	)		1,188
Impairment charge				207			—			—					207
Restructuring costs				405			—			—					405
				35,551			4,214			210					39,975
	Income (loss) from operations			13,075			4,022			(1,191	)				15,906
Other (income) expense:
	Interest income			(120	)		(85	)		—					(205	)
	Interest expense			12,544			—			1,842		(4	)		14,386
	Amortization of debt financing costs			777			—			1,105		(5	)		1,882
	Minority interest expense			73			—			—					73
	Equity income of affiliates			(415	)		—			—					(415	)
	Loss (gain) from sale of property, plant and equipment and securities			30			(1,000	)		1,000		(2	)		30
	Other (income) expense, net			(154	)		(226	)		—					(380	)
				12,735			(1,311	)		3,947					15,371
	Income (loss) before income taxes			340			5,333			(5,138	)				535
Income tax provision				2,071			1			—		(6	)		2,072
		Net (loss) income	$	(1,731	)	$	5,332		$	(5,138	)			$	(1,537	)

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

31

PORTOLA PACKAGING, INC. AND SUBSIDIARIES

UNAUDITED PRO FORMA CONDENSED CONSOLIDATED

STATEMENT OF OPERATIONS

For the Year Ended August 31, 2002
(in thousands)

									Pro Forma					Portola
			Portola			Tech			Adjustments					Pro Forma
Sales			$	210,757		$	32,016		$	—				$	242,773
Cost of sales				157,133			24,874			981		(1	)		182,988
	Gross profit			53,624			7,142			(981	)				59,785
Selling, general and administrative				30,844			4,043			50		(2	)		34,937
Research and development				3,069			245			—					3,314
Amortization of intangibles				1,551			—			285		(3	)		1,836
				35,464			4,288			335					40,087
	Income (loss) from operations			18,160			2,854			(1,316	)				19,698
Other (income) expense:
	Interest income			(1,083	)		(65	)		—					(1,148	)
	Interest expense			13,251			—			1,842		(4	)		15,093
	Amortization of debt financing costs			756			—			1,105		(5	)		1,861
	Minority interest expense			113			—			—					113
	Equity income of affiliates			(815	)		—			—					(815	)
	Gain from sale of property, plant and equipment and securities			(20	)		—			—					(20	)
	Income on recovery of note receivable			(1,103	)		—			—					(1,103	)
	Other (income) expense, net			246			65			—					311
				11,345			—			2,947					14,292
	Income (loss) before income taxes			6,815			2,854			(4,263	)				5,406
Income tax provision (benefit)				2,242			—			(564	)	(6	)		1,678
		Net income (loss)	$	4,573		$	2,854		$	(3,699	)			$	3,728

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

32

PORTOLA PACKAGING, INC. AND SUBSIDIARIES

UNAUDITED PRO FORMA CONDENSED CONSOLIDATED

STATEMENT OF OPERATIONS

For the Three-Month Period Ended November 30, 2003
(in thousands)

						Tech
						9/1/03 to			Pro Forma					Portola
			Portola			9/18/03			Adjustments					Pro Forma
Sales			$	59,838		$	2,103		$	—				$	61,941
Cost of sales				47,961			3,484			(46	)	(1	)		49,566
										(1,833	)	(7	)
	Gross profit			11,877			(1,381	)		1,879					12,375
Selling, general and administrative				7,741			4,019			(3,597	)	(7	)		8,163
Research and development				1,396			—			—					1,396
Amortization of intangibles				295			—			12		(3	)		307
Impairment charge				—			—			—					—
Restructuring charges				343			—			—					343
				9,775			4,019			(3,585	)				10,209
	Income (loss) from operations			2,102			(5,400	)		5,464					2,166
Other (income) expense:
	Interest income			(3	)		(1	)		—					(4	)
	Interest expense			3,405			—			65		(4	)		3,470
	Amortization of debt financing costs			430			—			46		(5	)		476
	Minority interest expense			16			—			—					16
	Equity income of affiliates			(129	)		(27	)		—					(156	)
	Gain from sale of property, plant and equipment and securities			(3	)		—			—					(3	)
	Other (income) expense, net			(1,415	)		3			—					(1,412	)
				2,301			(25	)		111					2,387
	(Loss) income before income taxes			(199	)		(5,375	)		5,353					(221	)
Income tax provision				791			—			—		(6	)		791
		Net (loss) income	$	(990	)	$	(5,375	)	$	5,353				$	(1,012	)

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

33

PORTOLA PACKAGING, INC. AND SUBSIDIARIES

UNAUDITED PRO FORMA CONDENSED CONSOLIDATED

STATEMENT OF OPERATIONS

For the Three-Month Period Ended November 30, 2002
(in thousands)

									Pro Forma					Portola
			Portola			Tech			Adjustments					Pro Forma
Sales			$	51,954		$	8,727		$	—				$	60,681
Cost of sales				41,247			6,941			245		(1	)		48,433
	Gross profit			10,707			1,786			(245	)				12,248
Selling, general and administrative				7,577			1,068			—					8,645
Research and development				1,182			—			—					1,182
Amortization of intangibles				204			—			71		(3	)		275
				8,963			1,068			71					10,102
	Income (loss) from operations			1,744			718			(316	)				2,146
Other (income) expense:
	Interest income			(17	)		(14	)		—					(31	)
	Interest expense			3,167			—			389		(4	)		3,556
	Amortization of debt financing costs			180			—			276		(5	)		456
	Minority interest expense			24			—			—					24
	Equity income of affiliates			(113	)		—			—					(113	)
	Loss from sale of property, plant and equipment and securities			49			4			—					53
	Other (income) expense, net			545			(144	)		—					401
				3,835			(154	)		665					4,346
	(Loss) income before income taxes			(2,091	)		872			(981	)				(2,200	)
Income tax benefit				(779	)		—			—		(6	)		(779	)
		Net (loss) income	$	(1,312	)	$	872		$	(981	)			$	(1,421	)

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

34

PORTOLA PACKAGING, INC. AND SUBSIDIARIES

NOTES TO UNAUDITED PRO FORMA

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

For the Years Ended August 31, 2003 and 2002
Three-Month Periods Ended November 30, 2003 and 2002
(in thousands)

The unaudited pro forma consolidated statements of operations give effect to the following unaudited pro forma adjustments:

(1) Adjustment to reflect depreciation expense on increase of book value of property, plant and equipment to fair market value as follows:

									9/1/03
	Depreciation								through
	period in years		Amount		Annual		Quarterly		9/18/03
Buildings		39	$	340	$	8	$	2		—
Machinery and equipment		7		6,785		970		242	$	46
Furniture and fixtures		5		15		3		1		—
			$	7,140	$	981	$	245	$	46

(2)

Adjustment to eliminate $75 and $50 in selling, general and administrative expenses for the years ended August 31, 2003 and 2002, respectively, and $1,000 in gain on sale of assets of Tech Industries Ireland Ltd. (“Tech Ireland”) for the year ended August 31, 2003. Tech Ireland was distributed to the shareholders of Tech Industries prior to, and in contemplation of, the acquisition of Tech Industries.

(3)

Adjustment to reflect amortization of identifiable intangible assets as follows:

									9/1/03
	Amortization								through
	period in years		Amount		Annual		Quarterly		9/18/03
Customer relationships		20	$	2,600	$	130	$	32	$	5
Website		5		400		80		20		4
Covenant not to compete		5		374		75		19		3
Trademark and tradename		Indefinite		5,000		—		—		—
			$	8,374	$	285	$	71	$	12

(4)	Adjustment to record interest expense on the additional borrowings due to the acquisition of Tech Industries.
(5)	Adjustment to record amortization of debt financing costs for the amended and restated senior credit facility to finance the Tech Industries acquisition of $1,105, $1,105, $46 and $276 for the years ended August 31, 2003 and 2002, and the three-month periods ended November 30, 2003 and 2002.

35

(6)

Tech Industries terminated its “S” Corporation status at the time of the acquisition. No corporate income tax provision (benefit) has been recorded for the respective periods since Tech Industries’ income (loss) and the effect of the pro forma adjustments would have been offset by the reversal of a portion of Portola’s valuation allowance or an increase in the valuation allowance provided against its net deferred tax assets, except for the year ended August 31, 2002.

(7)

Adjustment to reflect a discretionary bonus paid to employees of Tech Industries immediately prior to, and in contemplation of, the acquisition of Tech Industries by Portola. This adjustment totaling $5,430 does not include the normalized bonus of $191 based on Tech Industries’ historical and prospective bonus plan.

36 -----END PRIVACY-ENHANCED MESSAGE-----

EX-23.1

Ex-23.1

EX-99.1

Ex-99.1

EX-99.2

Ex-99.2

EX-99.3

Ex-99.3